How Are Bonus Decisions Made?
How are bonus decisions made? What criteria goes into determining buckets? Is it based on group or division revenue?
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Based on the most helpful WSO content, here are the key points regarding how bonus decisions are made and the criteria involved:
Group Head's Influence:
Individual Contributions:
Static vs. Variable Amounts:
Experience and Performance:
Revenue and Group Performance:
Bonus Tiers:
In summary, bonus decisions are multifaceted, involving individual performance, group head influence, and sometimes static amounts across groups. Personal contributions and the ability to link work directly to the firm's profitability are critical factors.
Sources: 2015-2016 salary & bonus discussion, 2015-2016 salary & bonus discussion, 2020 bonuses, Associate guide on analyzing an income statement, How is bonus split determined (ie cash vs stock)
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Generally speaking, there are 3-4 main factors:
1) Group: some groups are generating more revenues than others so a fixed bonus will flow to the groups raking in more deal flow as opposed to the groups sitting on their thumbs pitching and doing jack shit most of the year. This principle also applies to regional office differences.
2) Performance: within your group, the top performers will get compensated more relative to their less performing peers. U.S. low performers may get 40-50% of base while top performers 80%+ of base. London the bonus range is more extreme: low performers getting next to nothing while top performers in the same range as US counterparts sometimes more even.
3) Politics: you need to play the politics game. Sometimes this can be optics and others just being good boy subordinate kissing ass all the time. Ultimately, perception can go a long way in some groups. I have seen and know many people getting better reviews and bonuses due to this aspect alone. If you are the keener guy who is a master of Excel and PPT without the political/charismatic charm, the guy who can do the job still adequately and check these boxes will probably receive more clout when bonuses are being considered.
Hope this helps.
if youre in a regional office and you have a vp staffer but a md that runs the office, who has ultimately / larger sway in bonus decisions. iirc, the regional office folks talk abt it with hq people and it seems like its up to the ultimate discretion of hq folks. dunno if any other regional office people can chime in and relate.
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